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2 Foreword Queensland Fire and Emergency Services is a Queensland Government department established under the Public Service Act The department was established on 1 November 2013 under The Public Service Departmental Arrangements Notice (No. 8) The department is controlled by the State of Queensland which is the ultimate parent. The financial statements for Queensland Fire and Emergency Services have been prepared in accordance with the Financial and Performance Management Standard 2009 and other requirements detailed in note 2(a). The financial statements have been prepared on the basis that the distribution of functions to the new department happened on 1 November 2013, the first day of the month immediately after which the distribution happened in accordance with the Financial Accountability Act The financial statements report the department s assets, liabilities and equity as at 30 June 2014, and income and expenses. The financial statements have been prepared to provide the following users with information relevant to the department s financial performance and its financial position: Minister for Police, Fire and Emergency Services Members of the Legislative Assembly of Queensland Community organisations Government and semi-government instrumentalities Our partners. 52

5 Statement of Changes in Equity Accumulated Surplus Contributed Equity TOTAL $'000 $'000 $'000 Balance as at 1 November Operating result from continuing operations 28,509-28,509 Total other comprehensive income Increase/(decrease) in asset revaluation surplus Total comprehensive income for the year Transactions with owners as owners Net assets transferred through Machinery of Government Assets transferred (to)/from other departments Net transactions with owners as owners 28,509-28,509 47,697 47,697 - (897) (897) - 46,800 46,800 Balance as at 30 June ,509 46,800 75,309 The accompanying notes form part of these statements. 55

8 1. Objectives and principal activities of the department Queensland Fire and Emergency Services (QFES) was established on 1 November 2013 to provide fire and emergency services in partnership with the community and enhance community safety by minimising the impact of fire and emergency incidents on the people, environment and economy of Queensland. This new department incorporates parts of two divisions of the former Department of Community Safety the Queensland Fire and Rescue Service and Emergency Management Queensland. The department is responsible for saving lives, protecting property, and helping preserve the natural environment. Funding for the departmental services delivered by the department has come from parliamentary appropriations and the following revenue sources: Advisory and consultancy services; Commercial and community training; Commercial contract services; Commonwealth grants; Contributions, including donations and sponsorships; Fees for attendance at incidents and; Emergency management levies 2. Summary of significant accounting policies (a) Statement of compliance The department has prepared these financial statements in compliance with section 42 of the Financial and Performance Management Standard These financial statements are general purpose financial statements and have been prepared on an accrual basis in accordance with Australian Accounting Standards and Interpretations. In addition, the financial statements comply with Queensland Treasury and Trade s Minimum Reporting Requirements for the year ending 30 June 2014, published May 2014 and other authoritative pronouncements. The department has applied the Australian Accounting Standards and Interpretations that are applicable to not-for-profit entities, as Queensland Fire and Emergency Services is a not-for-profit department. Unless otherwise stated, the financial statements have been prepared in accordance with the historical cost convention. (b) The reporting entity In the process of reporting the department as a single economic entity, all material transactions and balances internal to the department, have been eliminated. The major departmental services undertaken by the department are disclosed in note 2(z). The Statement of comprehensive income by major departmental services has not been prepared as the department is a single service entity. (c) Administered transactions and balances Where the department administers, but does not control, certain resources on behalf of the Government, it has responsibility and is accountable for administering related transactions and items. It does not have the discretion to deploy the resources for the achievement of the department's objectives. Administered transactions and balances are disclosed in note 30. These transactions and balances are not significant in comparison to the department s overall financial performance/financial position. (d) Trust and agency transactions and balances The department undertakes certain trustee transactions on behalf of trust beneficiaries. 58

9 As the department acts only in a custodial role in respect of these transactions and balances, they are not recognised in the financial statements, but are disclosed in note 31. Applicable audit arrangements are also shown in note 31. (e) Appropriation revenue for services Appropriations provided under the Appropriation Act 2013 are recognised as revenue when received or receivable. Where approved, appropriation revenue is recorded as receivable if amounts are not received at the end of the reporting period. (f) User charges and fees User charges and fees controlled by the department are recognised as revenues when the related services are provided and can be measured reliably with a sufficient degree of certainty. This involves either invoicing for related goods/services and/or the recognition of accrued revenue. User charges and fees are controlled by the department where they can be deployed for the achievement of departmental objectives. Taxes, fees and fines collected but not controlled by the department are reported as administered revenue. Refer note to 30. (g) Grants and other contributions Grants, contributions, donations and gifts that are non-reciprocal in nature are recognised as revenue in the year in which the department obtains control over them. Where grants are received that are reciprocal in nature, revenue is accrued over the term of the funding arrangements. Contributed assets are recognised at their fair value. Contributions of services are recognised only when a fair value can be determined reliably and the services would have been purchased if they had not been donated. (h) Special payments Special payments include ex gratia expenditure and other expenditure that the department is not contractually or legally obligated to make to other parties. In compliance with the Financial and Performance Management Standard 2009, the department maintains a register setting out details of all special payments greater than $5,000. The total of all special payments (including those of $5,000 or less) is disclosed separately within Other Expenses (Note 15). However, descriptions of the nature of special payments are only provided for special payments greater than $5,000. (i) Cash and cash equivalents For the purposes of the Statement of Financial Position and the Statement of Cash Flows, cash assets include all cash and cheques receipted but not banked at 30 June as well as deposits at call with financial institutions. It also includes investments with short periods to maturity that are readily convertible to cash on hand at the department's option and that are subject to a low risk of change in value. (j) Receivables Trade debtors are recognised at the amounts due at the time of sale or service delivery. Settlement of these amounts is generally required between 14 to 30 days from the invoice date. The collectability of receivables is assessed periodically with allowance being made for impairment. Additional information on impairment is contained in notes 13 and 17. All known bad debts were written off as at 30 June. Refer note 29 for an analysis of movements. Other debtors generally arise from transactions outside the usual operating activities of the department and are recognised at their assessed values. Settlement terms depend on the nature of the receivable. No interest is charged (other than for overdue emergency management levies) and no security is obtained. 59

10 (k) Inventories Inventories held for sale are valued at the lower of cost and net realisable value. Cost of these inventories is assigned on a weighted average basis and includes expenditure incurred in acquiring the inventories and bringing them to their existing condition, except for training costs which are expensed as incurred. Net realisable value is determined on the basis of the department's normal selling pattern. Expenses associated with marketing, selling and distribution are deducted to determine net realisable value. Inventories held for internal consumption are valued at cost or weighted average cost and include expenditure incurred in acquiring inventories and bringing them to their existing condition pursuant to AASB 102 Inventories. Inventories held for internal consumption are those inventories which the department consumes in its normal course of business. The cost of inventories held for internal consumption is adjusted, where applicable, for any loss of service potential. (l) Non-current assets classified as held for sale Non-current assets held for sale, consist of those assets that management has determined are available for immediate sale in their present condition, and their sale is highly probable within the next twelve months. In accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations, when an asset is classified as held for sale, its value is measured at the lower of the asset's carrying amount and fair value less costs to sell. Any restatement of the asset's value to fair value less costs to sell (in compliance with AASB 5) is a nonrecurring valuation. Such assets are no longer amortised or depreciated upon being classified as held for sale. (m) Acquisitions of assets Actual cost is used for the initial recording of all acquisitions of assets controlled by the department. Cost is determined as the value given as consideration plus costs incidental to the acquisition, including all other costs incurred in getting the assets ready for use, including architects' fees and engineering design fees. However any training costs are expensed as incurred. Assets acquired at no cost or for nominal consideration, other than from an involuntary transfer from another Queensland department, are recognised at their fair value at the date of acquisition in accordance with AASB 116 Property, Plant and Equipment and Queensland Treasury and Trade s Non-current Asset Policies for the Queensland Public Sector. Where assets are received free of charge from another Queensland department (whether as a result of machinery-of-government or other involuntary transfer), the acquisition cost is recognised at the carrying amount in the books of the transferor immediately prior to the transfer together with any accumulated depreciation. Assets under construction are recorded as capital work in progress until the date of practical completion, at which time they are transferred to the appropriate asset class. (n) Property, plant and equipment Items of property, plant and equipment with a cost, or other value, equal to or in excess of the following thresholds are recognised in the financial statements in the year of acquisition: Buildings and land improvements $10,000 Heritage and cultural $5,000 Land $1 Major plant and equipment $5,000 Plant and equipment $5,000 60

11 (o) Revaluation of non-current physical assets and intangible assets Land, buildings, major plant and equipment and heritage and cultural assets are measured at fair value in accordance with AASB 116 Property, Plant and Equipment, AASB 13 Fair Value Measurement and Queensland Treasury and Trade s Non-Current Asset Policies for the Queensland Public Sector. These assets are reported at their revalued amounts, being the fair value at the date of valuation, less any subsequent accumulated depreciation and impairment losses where applicable. In respect of the above mentioned asset classes, the cost of items acquired during the financial year has been judged by management of Queensland Fire and Emergency Services to materially represent their fair value at the end of the reporting period. Plant and equipment, (that is not classified as major plant and equipment) is measured at cost in accordance with the Non-Current Asset Policies. The carrying amounts for such plant and equipment at cost should not materially differ from their fair value. Intangible assets are measured at their historical cost, unless there is an active market for the assets concerned (in which case they are measured at fair value). Property, plant and equipment classes measured at fair value (refer above) are revalued on an annual basis either by appraisals undertaken by an independent professional valuer or internal expert, or by the use of appropriate and relevant indices. Revaluations using independent professional valuer or internal expert appraisals are undertaken at least once every three years. However, if a particular asset class experiences significant and volatile changes in fair value, that class is subject to specific appraisal in the reporting period, where practicable, regardless of the timing of the last specific appraisal. The fair values reported by the department are based on appropriate valuation techniques that maximise the use of available and relevant observable inputs and minimise the use of unobservable inputs (refer to Note 2(p)). Where assets have not been specifically appraised in the reporting period, their previous valuations are materially kept up-to-date via the application of relevant indices. Queensland Fire and Emergency Services ensures that the application of such indices results in a valid estimation of the assets' fair values at reporting date. The State Valuation Service (SVS) supplies the indices used for land and residential buildings, the index used for non-residential buildings is the Building Price Index (BPI) and is supplied by Gray, Robinson, Cottrell Pty Ltd (GRC) Quantity Surveyors. Such indices are derived from market information available to SVS and GRC. SVS and GRC provide assurance of their robustness, validity and appropriateness for application to the relevant assets. Indices used are also tested for reasonableness by applying the indices to a sample of assets, comparing the results to similar assets that have been valued by an independent professional valuer, and analysing the trend of changes in values over time. Through this process, which is undertaken annually, management assesses and confirms the relevance and suitability of indices provided, based on the departments' own particular circumstances. During the reporting period, the department reviewed all fair value methodologies in light of the new principles in AASB 13. Some minor adjustments were made to methodologies to take into account the more exitoriented approach to fair value under AASB 13, as well as the availability of more observable data for certain assets (e.g. land and buildings). Such adjustments in themselves - did not result in a material impact on the values for the affected Property Plant and Equipment classes. Any revaluation increment arising on the revaluation of an asset is credited to the asset revaluation surplus of the appropriate class, except to the extent it reverses a revaluation decrement for the class previously recognised as an expense. A decrease in the carrying amount on revaluation is charged as an expense, to the extent it exceeds the balance, if any, in the revaluation surplus relating to that asset class. On revaluation, accumulated depreciation is restated proportionately with the change in the carrying amount of the asset and any change in the estimate of remaining useful life. Materiality concepts under AASB 1031 Materiality are considered in determining whether the difference between the carrying amount and the fair value of an asset is material. 61

12 Separately identified components of assets are measured on the same basis as the assets to which they relate. Revaluation of land and buildings The department s land and buildings are divided into regions across the State and the valuation of these land and buildings is undertaken on a rolling program. The table below shows the program of revaluation: Year Region Northern, Far North and South West regions Brisbane Region, South East Region North Coast and Central regions Annually, one or more regions are independently assessed for value by the department s valuer, State Valuation Service (SVS), a unit of the Department of Natural Resources and Mines, such that each asset is independently valued over a three year cycle. The 2014 valuations were certified by the Manager Client Valuations, SVS. The department assessed the data provided by SVS. Assets with significant or unusual movements were referred back to SVS for review, resulting in a number of changes to the original valuation figures. Where necessary, consultation with local management was undertaken to resolve anomalies. (p) Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly derived from observable inputs or estimated using another valuation technique. Observable inputs are publicly available data that are relevant to the characteristics of the assets/liabilities being valued. Observable inputs used by the department include, but are not limited to, published sales data for land and general office buildings. Unobservable inputs are data, assumptions and judgements that are not available publicly, but are relevant to the characteristics of the assets/liabilities being valued. Significant unobservable inputs used by the department include, but are not limited to, subjective adjustments made to observable data to take account of the characteristics of the department assets/liabilities, internal records of recent construction costs (and/or estimates of such costs) for assets' characteristics/functionality, and assessments of physical condition and remaining useful life. Unobservable inputs are used to the extent that sufficient relevant and reliable observable inputs are not available for similar assets/liabilities. A fair value measurement of a non-financial asset takes into account a market participant s ability to generate economic benefits by using the asset in its highest and best use. All assets and liabilities of the department for which fair value is measured or disclosed in the financial statements are categorised within the following fair value hierarchy, based on the data and assumptions used in the most recent specific appraisals: level 1 represents fair value measurements that reflect unadjusted quoted market prices in active markets for identical assets and liabilities; level 2 represents fair value measurements that are substantially derived from inputs (other than quoted prices included within level 1) that are observable, either directly or indirectly; and level 3 represents fair value measurements that are substantially derived from unobservable inputs. None of the department s valuations of assets or liabilities are eligible for categorisation into level 1 of the fair value. As is the first year of application of AASB 13 by Queensland Fire and Emergency Services, there were no transfers of assets between fair value hierarchy levels during the period. More specific fair value information about the department s Property, Plant and Equipment is outlined in Note

13 (q) Intangibles Intangible assets with a cost or other value equal to or greater than $100,000 are recognised in the financial statements, items with a lesser value being expensed. Each intangible asset, less any anticipated residual value, is amortised over its estimated useful life to the department. The residual value is zero for all the department's intangible assets. It has been determined that there is not an active market for any of the department s intangible assets. As such, the assets are recognised and carried at cost less accumulated amortisation and accumulated impairment losses. No intangible assets have been classified as held for sale or form part of a disposal group held for sale. Internally generated software Expenditure on research activities relating to internally generated intangible assets is recognised as an expense in the period in which it is incurred. Costs associated with the development of computer software have been capitalised and are amortised on a straight-line basis over the period of expected benefit to the department (refer note 20). (r) Amortisation and depreciation of intangibles, property, plant and equipment Land is not depreciated as it has unlimited useful life. All intangible assets of the department have finite useful lives and are amortised on a straight line basis. Property, plant and equipment is depreciated on a straight-line basis so as to allocate the net cost or revaluated amount of each asset, less its estimate residual value, progressively over its estimated useful life to the department. Assets under construction (work-in-progress) are not depreciated until they have reached their service delivery capacity. Service delivery capacity relates to when construction is complete and the asset is first put to use or is installed ready for use in accordance with its intended application. These assets are then reclassified to the relevant classes with property, plant and equipment. Where assets have separately identifiable components that are subject to regular replacement, these components are assigned useful lives distinct from the asset to which they relate and are depreciated accordingly. Heritage and cultural assets comprise principally buildings and art work. They are depreciated on a straightline basis in order to write-off the value of each depreciable asset, less its estimated residual value, progressively over its estimated useful life to the department. Any expenditure that increases the originally assessed capacity or service potential of an asset, is capitalised and the new depreciable amount is depreciated over the remaining useful life of the asset to the department. Major spares purchase specifically for particular assets are capitalised and depreciated on the same basis as the asset to which they relate. The depreciable amount of improvements to leasehold land is allocated progressively over the estimated useful lives of the improvements or the unexpired period of the lease, whichever is shorter. The unexpired period of leases includes any option period where the exercise of that option is probable. A review has been conducted on all assets to determine the current economic life to the entity. Any change to an asset's economic life was applied as at 30 June Items comprising the department s technical library are expensed on acquisition. 63

14 For each class of depreciable asset the following depreciation and amortisation rates were used: Class Depreciation/ Amortisation rate % Buildings and Land Improvements 1.00 to 7.69 Heritage and Cultural 1.00 to Land Nil Plant and Equipment 5.00 to Intangibles: Software - Internally Generated to (s) Impairment of non-current assets All non-current physical and intangible assets are assessed for indicators of impairment on an annual basis. If an indicator of possible impairment exists, the department determines the asset's recoverable amount. Any amount by which the asset's carrying amount exceeds the recoverable amount is recorded as an impairment loss. The asset's recoverable amount is determined as the higher of the asset's fair value less costs to sell and depreciated replacement cost. An impairment loss is recognised immediately in the Statement of Comprehensive Income, unless the asset is carried at a revalued amount. When the asset is measured at a revalued amount, the impairment loss is offset against the asset revaluation surplus of the relevant class to the extent available. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Refer also notes 20 and 21. (t) Leases A distinction is made in the financial statements between finance leases that effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership, and operating leases under which the lessor retains substantially all risks and benefits. No non-current assets held by the department have been acquired by means of a finance lease. Operating lease payments are representative of the pattern of benefits derived from the leased assets and accordingly, are expensed to the Statement of Comprehensive Income in the periods in which they are incurred. (u) Other financial assets Other financial assets are brought to account at the lower of cost and recoverable amount and are disclosed at their fair values if held. (v) Payables Trade creditors are recognised at the amount to be paid for the goods and services received gross of applicable trade and other discounts, inclusive of Goods and Services Tax. Amounts owing are unsecured and are generally settled on 30-day terms. (w) Financial instruments Specific accounting policies relating to the financial instrument classes are disclosed elsewhere in these notes. 64

15 Recognition Financial assets and financial liabilities are recognised in the Statement of Financial Position when the department becomes party to the contractual provisions of the financial instrument. Classification Financial instruments are classified and measured as follows: Cash and cash equivalents - held at fair value through profit and loss Receivables - held at amortised cost Payables - held at amortised cost The department enters into contracts with overseas suppliers. These contracts are subject to price risk. Price risk is reflected by price variation changes due to foreign currency movements. Only significant contracts between the department and suppliers are hedged to counteract potential adverse foreign currency fluctuations. Exposure to price risk on these transactions at balance date is, therefore mitigated. Transactions in foreign currencies are converted to local currency at the rate of the exchange ruling at the date of the transaction. Foreign currency monetary items that are outstanding at the reporting date are translated using the spot rate at the end of the period. The department is permitted to operate a bank overdraft to an approved limit. Under current Government arrangements, no interest is payable by the department on that overdraft. All other disclosures relating to the measurement basis and financial risk management of financial instruments held by the department are included in note 29. (x) Employee benefits Employer superannuation contributions, annual leave levies and long service leave levies are regarded as employee benefits. Payroll tax and workers' compensation insurance are a consequence of employing employees, but are not counted in an employee's total remuneration package. They are not employee benefits and are recognised separately as employee related expenses. Wages, salaries and sick leave Wages and salaries due but unpaid at reporting date are recognised in the Statement of Financial Position at the current salary rates. As the department expects such liabilities to be wholly settled within 12 months of reporting date, the liabilities are recognised at undiscounted amounts. Prior history indicates that on average, sick leave taken each reporting period is less than the entitlement accrued. This is expected to continue in future periods. Accordingly, it is unlikely that existing accumulated entitlements will be used by employees and no liability for unused sick leave entitlements is recognised. As sick leave is non-vesting, an expense is recognised for this leave as it is taken. Annual leave The Queensland Government s Annual Leave Central Scheme (ALCS) became operational on 30 June 2008 for departments, commercialised business units and shared service providers. Under this scheme a levy is made on the department to cover the cost of employee s annual leave (including leave loading and on-costs). The levies are expensed in the period in which they are payable. Amounts paid to employees for annual leave are claimed from the scheme quarterly in arrears. No provision for annual leave is recognised in the department s financial statements, as the liability is held on a whole-of-government basis and reported in those financial statements pursuant to AASB 1049 Whole of Government and General Government Sector Financial Reporting. 65

16 Long service leave Under the Queensland Government s long service leave scheme, a levy is made on the department to cover the cost of employees' long service leave. Levies are expensed in the period in which they are payable. Amounts paid to employees for long service leave are claimed from the scheme quarterly in arrears. No provision for long service leave is recognised in the department s financial statements, the liability being held on a whole-of-government basis and reported in those financial statements pursuant to AASB 1049 Whole of Government and General Government Sector Financial Reporting. Superannuation Employer superannuation contributions are paid to QSuper, the superannuation plan for Queensland Government employees, at rates determined by the Treasurer on the advice of the State Actuary. Contributions are expensed in the period in which they are paid or payable. The department s obligation is limited to its contribution to QSuper. The QSuper scheme has defined benefit and defined contribution categories. The liability for defined benefits is held on a whole-of-government basis and reported in those financial statements pursuant to AASB 1049 Whole of Government and General Government Sector Financial Reporting. Time off in lieu of overtime (TOIL) and accrued time Liabilities for TOIL and accrued time are recognised in the Statement of Financial Position as the amount unpaid at reporting date in respect to all employee services and related on-costs such as payroll tax, workcover premiums, long service leave levies and employer superannuation contributions. As short-term employee entitlement liabilities, provisions for TOIL and accrued time are shown as current liabilities and are measured based on remuneration rates expected to be paid when the liabilities are settled. A liability for TOIL or accrued time is only recognised in the Statement of Financial Position where payment for that time vests in the employee. No liability is recorded in circumstances where the employee has no right to payment for the TOIL or accrued time. Key management personnel and remuneration Key management personnel and remuneration disclosures are made in accordance with section 5 of the Financial Reporting Requirements for Queensland Government Agencies issued by Queensland Treasury and Trade. Refer to Note 9 for the disclosures on key management personnel and remuneration. (y) Finance/borrowing costs Finance costs are recognised as an expense in the period in which they are incurred. Finance costs include: - Interest on short-term and long-term borrowings; - Ancillary administration charges. No borrowing costs are capitalised into qualifying assets. (z) Major services of the department The departmental services were transferred from the Public Safety Business Agency as a consequence of a machinery-of-government change as per the Public Service Departmental Arrangements Notice (No.8) 2013, with effect from 1 November 2013 Major services of the department during the period were providing landscape fire services, structural fire services, all hazards and rescue services, the state s disaster management system, disaster management and community assistance services, community risk mitigation services and buildings and infrastructure fire safety services. It provided management and support for the Rural Fire Service Queensland and the State Emergency Service and administered state government grants to other volunteer emergency services organisations. In delivering these services, it provided expert advice and services for environmental and hazard mitigation, community education, fire prevention, hazardous materials management and rescue 66

17 services including, vehicle extrications, swift water rescue, confined space rescue, vertical rescue and urban search and rescue. (aa) Insurance The department s non-current physical assets and other risks are insured through the Queensland Government Insurance Fund (QGIF) and other commercial insurance providers, premiums being paid on a risk assessment basis. In addition, the department pays premiums to WorkCover Queensland in respect of its obligations for employee compensation. (ab) Services received/provided free of charge or for nominal value Contributions of services are recognised only if the services would have been purchased if they had not been donated and their value can be measured reliably. Where this is the case, an equal amount is recognised as revenue and an expense. (ac) Contributed equity Non-reciprocal transfers of assets and liabilities between wholly owned Queensland State Public Sector entities as a result of machinery-of-government changes are adjusted to Contributed Equity in accordance with Urgent Issues Group Interpretation 1038 Contributions by Owners Made to Wholly Owned Public Sector Entities. Appropriation for equity adjustments is similarly designated. (ad) Taxation The department is a State body as defined under the Income Tax Assessment Act 1936 and is exempt from Commonwealth taxation with the exception of Fringe Benefits Tax (FBT) and Goods and Services Tax (GST). FBT and GST are the only taxes accounted for by Queensland Fire and Emergency Services. As such, GST credits receivable from/payable to the Australian Taxation Office are recognised and accrued (refer note 17). (ae) Issuance of financial statements The financial statements are authorised for issue by the Commissioner and the Chief Finance Officer at the date of signing the Management Certificate. (af) Accounting estimates and judgements The preparation of financial statements necessarily requires the determination and use of certain critical accounting estimates, assumptions and management judgements that have a potential to cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Such estimates, judgements and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in future periods as relevant. Estimates and assumptions with the most significant effect on the financial statements are outlined in the following notes: Valuation of Property, Plant and Equipment - notes 2(o -p) and note 21; Contingencies note 27; and Depreciation and amortisation note 2(r) and note 11. The Australian government passed its Clean Energy Act in November 2011 which resulted in the introduction of a price on carbon emissions made by Australian businesses from 1 July The carbon tax was abolished subsequent to balance date. The withdrawal of the carbon pricing mechanism is not expected to have a significant impact on the department's critical accounting estimates, assumptions and management judgements. (ag) Rounding and comparatives Amounts included in the financial statements are in Australian dollars and have been rounded to the nearest $1,000 or, where the amount is $500 or less, to zero, unless disclosure of the full amount is specifically required. Sub-totals and totals may not add due to rounding, but the overall discrepancy is no greater than two thousand dollars. 67

18 No comparative information is provided as the agency operated for the first time during the current financial year. Machinery-of-Government changes effective 1 November 2013 transferred responsibilities for: Fire and rescue services from the Public Safety Business Agency to Queensland Fire and Emergency Services, and Emergency management services from the Public Safety Business Agency to Queensland Fire and Emergency Services. (ah) Machinery of Government changes The functions and responsibilities of Fire and rescue services and Emergency management services were transferred from the Public Safety Business Agency to Queensland Fire and Emergency Services as a consequence of a machinery-of-government change as per the Public Service Departmental Arrangements Notice (No.8) 2013, with effect from 1 November 2013 As a result of these changes, the following asset and liabilities were transferred to the department: 2014 $ 000 Controlled Assets Cash 6,313 Receivables 29,596 Inventory 1,575 Other current asset 6,094 Property plant and equipment and other non-current assets 32,469 76,047 Liabilities Payables 28,351 28,351 Net Assets 47,696 Administered 2014 Assets $ 000 Receivables Liabilities Transfer to Government payable Net Assets - Revenue and expenses relating to fire and rescue services and emergency management services for the full year, including transactions processed by the Public Safety Business Agency prior to the transfer were: 2014 $ 000 Controlled Revenue 628,589 Expenses 586,119 42,470 68

19 2014 $ 000 Administered Revenue 82 Expenses 82 - Revenue and expenses from 1 November 2013 (the date of the transfer) are reflected within these financial statements and separately disclosed within the Statement of comprehensive income. (ai) New and revised accounting standards and reporting requirements The department did not voluntarily change any of its accounting policies during The only Australian Accounting Standard changes applicable for the first time as from that have had a significant impact on the department's financial statements are those arising from AASB 13 Fair Value Measurement, as explained below. AASB 13 Fair Value Measurement became effective from reporting periods beginning on or after 1 January AASB 13 sets out a new definition of 'fair value' as well as new principles to be applied when determining the fair value of assets and liabilities. The new requirements apply to all of the department's assets and liabilities (excluding leases) that are measured and/or disclosed at fair value or another measurement based on fair value. The impacts of AASB 13 relate to the fair value measurement methodologies used and financial statement disclosures made in respect of such assets and liabilities. The department reviewed its fair value methodologies (including instructions to valuers, data used and assumptions made) for all items of property, plant and equipment measured at fair value to assess whether those methodologies comply with AASB 13. To the extent that the previous methodologies were not in compliance with AASB 13, valuation methodologies were revised accordingly to be in line with AASB 13. The revised valuation methodologies have not resulted in material differences from the previous methodologies. AASB 13 has required an increased amount of information to be disclosed in relation to fair value measurements for both assets and liabilities. For those fair value measurements of assets or liabilities that substantially are based on data that is not 'observable' (i.e. accessible outside the department), the amount of information disclosed has significantly increased. Note 2(p) explains some of the principles underpinning the additional fair value information disclosed. Most of this additional information is set out in note 21 Property Plant and Equipment. A revised version of AASB 119 Employee Benefits became effective for reporting periods beginning on or after 1 January As the department does not directly recognise any employee benefit liabilities (refer to Note 2(x)), the only implications for the department were the revised concept of 'termination benefits' and the revised recognition criteria for termination benefit liabilities. If termination benefits meet the AASB 119 timeframe criterion for 'short-term employee benefits', they will be measured according to the AASB 119 requirements for 'short-term employee benefits'. Otherwise, termination benefits need to be measured according to the AASB 119 requirements for 'other long-term employee benefits'. Under the revised standard, the recognition and measurement of 'other long-term employee benefits' are accounted for according to most of the requirements for defined benefit plans. The revised AASB 119 includes changed criteria for accounting for employee benefits as 'short-term employee benefits'. However, as Queensland Fire and Emergency Services is a member of the Queensland Government central schemes for annual leave and long service leave, this change in criteria has no impact on the department s financial statements as the employer liability is held by the central scheme. The revised AASB 119 also includes changed requirements for the measurement of employer liabilities/assets arising from defined benefit plans, and the measurement and presentation of changes in such liabilities/assets. The department makes employer superannuation contributions only to the QSuper defined benefit plan, and the corresponding QSuper employer benefit obligation is held by the State. Therefore, those changes to AASB 119 will have no impact on the department. AASB 1053 Application of Tiers of Australian Accounting Standards became effective for reporting periods beginning on or after 1 July AASB 1053 establishes a differential reporting framework for those entities that prepare general purpose financial statements, consisting of two Tiers of reporting requirements 69

20 Australian Accounting Standards (commonly referred to as 'Tier 1'), and Australian Accounting Standards Reduced Disclosure Requirements (commonly referred to as 'Tier 2'). Tier 1 requirements comprise the full range of AASB recognition, measurement, presentation and disclosure requirements that are currently applicable to reporting entities in Australia. The only difference between the Tier 1 and Tier 2 requirements is that Tier 2 requires fewer disclosures than Tier 1. Pursuant to AASB 1053, public sector entities like the department may adopt Tier 2 requirements for their general purpose financial statements. However, AASB 1053 acknowledges the power of a regulator to require application of the Tier 1 requirements. In the case of the department, Queensland Treasury and Trade is the regulator. Queensland Treasury and Trade has advised that its policy decision is to require adoption of Tier 1 reporting by all Queensland Government departments (including this department) and statutory bodies that are consolidated into the whole-of-government financial statements. Therefore, the release of AASB 1053 and associated amending standards has had no impact on the department. The department is not permitted to early adopt a new or amended accounting standard ahead of the specified commencement date unless approval is obtained from Queensland Treasury and Trade. Consequently, the department has not applied any Australian Accounting Standards and Interpretations that have been issued but are not yet effective. The department applies standards and interpretations in accordance with their respective commencement dates. At the date of authorisation of the financial report, the expected impacts of new or amended Australian Accounting Standards with future commencement dates are as set out below. AASB 1055 Budgetary Reporting applies from reporting periods beginning on or after 1 July The department will need to include in its financial statements the original budgeted figures from the Income Statement, Balance Sheet, Statement of Changes in Equity, and Cash Flow Statement as published in the Queensland Government's Service Delivery Statements. The budgeted figures will need to be presented consistently with the corresponding (actuals) financial statements, and will be accompanied by explanations of major variances between the actual amounts and the corresponding original budgeted figures. In addition, the department will need to include the original budgeted information for major classes of administered income and expenses, and major classes of administered assets and liabilities. This budgeted information will need to be presented consistently with the corresponding (actuals) administered information, and will be accompanied by explanations of major variances between the actual amounts and the corresponding budgeted financial information. The following new and revised standards apply as from reporting periods beginning on or after 1 January 2014 AASB 10 Consolidated Financial Statements; AASB 11 Joint Arrangements; AASB 12 Disclosure of Interests in Other Entities; AASB 127 (revised) Separate Financial Statements; AASB 128 (revised) Investments in Associates and Joint Ventures. AASB Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards [AASB 1, 2, 3, 5, 7, 101, 107, 112, 118, 121, 124, 132, 133, 136, 138, 139, 1023 & 1038 and Interpretations 5, 9, 16 & 17] ; and AASB Amendments to Australian Accounting Standards - Australian Implementation Guidance for Not-for-Profit Entities - Control and Structured Entities AASB 10 redefines and clarifies the concept of control of another entity, and is the basis for determining which entities should be consolidated into an entity s financial statements. AASB applies the various principles in AASB 10 for determining whether a not-for-profit entity controls another entity. AASB 11 deals with the concept of joint control and sets out new principles for determining the type of joint arrangement that exists, which in turn dictates the accounting treatment. The new categories of joint arrangements under AASB 11 are more aligned to the actual rights and obligations of the parties to the arrangement. The new categories of joint arrangements under AASB 11 are more aligned to the actual rights and obligations of the parties to the arrangement. The department has assessed its arrangements with other entities to determine whether a joint arrangement exists in terms of AASB 11. Based on present arrangements, no joint arrangements exist. However, if a joint arrangement does arise in future, the department will need to follow the relevant accounting treatment specified in either AASB 11 or the revised AASB 128, depending on the nature of the joint arrangement. 70

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